Economic research competition

Title: Risk appetite for innovation and productivity in private financial services companies 

Theme: Growth and productivity of the financial services sector

Summary: Beauhurst will identify where high-growth firms are emerging in financial services sectors, what incentives and barriers they face to scaling up and how this links to risk exposure. This research will inform our strategic thinking on key growth trends and fill gaps in our knowledge of innovation and scale-up finance.

Title: Enhancing competitiveness through increasing export volumes via foreign direct investments

Theme: International competitiveness of the UK financial services sector

Summary: This research will help shape the UK's financial services competitiveness by examining how regulation influences firms' business and location decisions post-Brexit. The findings will support us in developing policies that strengthen UK's position as a global financial centre.

Title: How regulatory changes may have reshaped financial stability and growth risks since the global financial crisis

Theme: Growth and productivity of the UK financial services sector and supporting the real economy and considering regulatory impacts

Summary: This research will investigate how post-global financial crisis (GFC) regulatory changes have reshaped financial network structures and risks across domestic and international markets. The research will provide us with a comprehensive framework for understanding the changing structure of financial markets.

Title: Improving measurement of productivity in UK financial services

Theme: Growth and productivity of the UK financial services sector

Summary: This research aims to understand the interplay between productivity in financial services and macroeconomic risks. London School of Economics (LSE) Growth Lab will develop a comprehensive risk framework to guide policies, exploring how regulation can balance promoting growth with risk. It will deliver new productivity metrics and identify key constraints in the UK. 
 

Title: Risks in the UK fintech sector: implications for consumer credit and economic growth

Theme: Supporting the real economy and considering regulatory impacts

Summary: University College London (UCL) will study tail risks in fintech firms using state-of-the-art statistical methods. The research will discuss the implications of these tail risks in fintech firms for consumers, economic growth and the policy implications for us. 

Title: Access and demand for new listed firms’ subsequent financing rounds.

Theme: Supporting the real economy and considering regulatory impacts

Summary: The University of Birmingham will study demand and supply side factors affecting access to finance of initial public offering (IPO) firms in the UK. The research will provide recommendations for regulatory frameworks that better align financial markets with the needs of IPO firms.

Growth is the increase in size of the economy. Growth can be driven by increases in productivity.  

• How well do we understand productivity in financial services? How can we accurately measure it? How do we reconcile the seemingly inverse relationship between risk exposure and productivity?  
• What caused the apparent changes in financial services productivity following the global financial crisis? What could be done about them?
• Which barriers hinder the widespread adoption and diffusion of new technologies in the financial services sector and what regulatory changes could reduce or remove these barriers? Are there any other ways regulation could encourage technological adoption and diffusion?
• What are the incentives and constraints for firms to innovate and increase productivity in UK financial services? How does financial service regulation affect this? How does the level of competition or the ability to cooperate affect these incentives and constraints?
• How has regulation affected risk-taking in UK financial services, particularly with regards to lending and investment decisions? 

Competitiveness is a measure of how attractive the UK is for businesses, consumers and investors and considers how well the UK economy achieves long-term sustainability, attracts international businesses and enables UK-based firms to compete effectively in international markets. It differs from competition (which is not a focus area) which refers to the process of rivalry between firms seeking to win customers’ business which, when it works effectively, leads to better prices, service and quality for consumers.  

• What are the threats and opportunities for the international competitiveness of the UK’s financial services sector over the next 10 years? What role is there for regulation in addressing or enhancing these?
• What is the relative value and the cost of UK financial regulation to firms competing internationally, and what difference does this make to their locational decisions (for example, where to locate business operations, where to locate business headquarters, what international markets to export to)?  
• What do agglomeration and space theories suggest would improve growth, international attractiveness, and competitiveness of UK-based financial services?

Regulation broadly refers to the tools the FCA has at its disposal to influence outcomes in financial services for businesses and consumers. It covers formal powers such rulemaking on conduct, prudential and other requirements, authorisation and supervision of firms, and the enforcement of rules, as well as wider advocacy and thought leadership.  

• How can regulatory or technological interventions such as Digital ID or Open Finance support growth through decreasing the cost of lending to, or investing in, SME’s and infrastructure in the UK? Do they affect growth through any other channels?
• What factors affect real economy firms’ access to finance, and real economy firms’ demand for finance? Which factors are more important in the UK, and to what extent are issues around finance for productive investment driven by finance supply factors or finance demand factors? How can regulation address these issues?  
• What are the potential benefits of shifting investment incentives from more speculative investments to productive long-term growth-enhancing investments, and how can financial service regulation encourage this?
• What risks might UK financial services activities pose for long-term UK growth (for example, financial instability, crowding out other real economy sectors)? What role can regulation play in mitigating these risks?
• What role does UK financial services sector play in supporting individuals to increase their human capital? How can regulation encourage this?
• What is the relationship between financial inclusion and economic growth in developed economies such as the UK? What regulatory levers could increase the dimensions of inclusion which enable growth and efficiency?
• What do alternative approaches such as complexity theory and systems thinking imply about the role of financial services and regulation in supporting the real economy?
• How does financial services regulation interact with other forms of regulation in supporting real economy growth? What are the key areas of interaction and dependency?